neco model questions vol1 2025 economics | Essay

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Question 1 View Details
A senior secondary school student is studying the fundamental ideas that underpin economics.
Question Parts
(a)
Define "want" and "need" and explain why scarcity exists in an economy.
(b)
Explain the concept of opportunity cost and illustrate it with a realistic example involving a student choosing between studying for an exam and attending a paid part‑time job.
(c)
Discuss how the price mechanism helps allocate scarce resources in a mixed economy, mentioning at least two ways in which prices convey information to producers and consumers.
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Question 2 View Details
The market for a locally produced snack is described by the linear demand and supply equations below: Demand: Qd = 500 – 2P Supply: Qs = 100 + 3P where Q is quantity in units and P is price in naira per unit. The government imposes a specific tax of ₦50 per unit on producers of the snack.
Question Parts
(a)
Determine the equilibrium price and quantity before the tax is introduced.
(b)
Show how the supply curve shifts after the tax and write the new supply equation.
(c)
Calculate the new equilibrium price paid by consumers (Pc), the price received by producers (Pp), and the equilibrium quantity after the tax.
(d)
Using the results above, compute the consumer surplus, producer surplus and dead‑weight loss before and after the tax. Comment on the welfare effect of the tax.
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Question 3 View Details
A firm sells a product whose market demand is described by the linear equation Q = 500 - 5P, where Q is the quantity demanded per month and P is the price per unit in Naira.
Question Parts
(a)
State the formula for the point price elasticity of demand and explain each component.
(b)
Calculate the price elasticity of demand when the price rises from N40 to N44. Use the derivative method (point elasticity).
(c)
Interpret the magnitude of the elasticity obtained in part (b). State whether demand is elastic, inelastic or unit‑elastic and justify your answer.
(d)
Based on the elasticity result, advise the firm whether it should raise the price from N40 to N44 if its objective is to increase total revenue. Explain the reasoning behind your advice.
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Question 4 View Details
A small manufacturing firm employs labour as its variable input. The table below shows the monthly output (units) produced with different numbers of workers employed. | Workers (L) | Output (Q) | |-------------|------------| | 1 | 10 | | 2 | 25 | | 3 | 45 | | 4 | 60 | | 5 | 70 | | 6 | 75 | Assume that the wage rate per worker is N5,000 per month and the price of the product is constant at N2,000 per unit.
Question Parts
(a)
Calculate the marginal product of labour (MPL) for each additional worker hired from the second to the sixth worker.
(b)
Compute the average product of labour (APL) for each level of employment shown in the table.
(c)
Identify the range of labour employment where the firm experiences increasing returns to labour, constant returns, and decreasing returns. Use the relationship between MPL and APL to justify your answer.
(d)
Assuming the firm wishes to maximise profit, explain how it should decide the optimal number of workers to employ. Incorporate the concepts of marginal revenue product of labour (MRPL) and the wage rate in your discussion.
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Question 5 View Details
A small manufacturing firm produces widgets. Its total cost (TC) function in naira is given by TC = 0.5Q^2 + 30Q + 200, where Q is the number of widgets produced per month. The market demand for the widget is described by the inverse demand function P = 200 – Q, where P is the price per widget in naira.
Question Parts
(a)
Derive the profit function and obtain the output level that maximises profit. Show all steps.
(b)
Calculate the maximum profit at the output found in part (a).
(c)
Determine the break‑even output(s) where profit is zero.
(d)
The government introduces a specific tax of ₦20 per widget produced. Re‑calculate the profit‑maximising output under the tax and comment on the change.
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Question 6 View Details
Consider a firm that sells a differentiated product in a monopolistically competitive market. The firm's estimated demand curve is P = 150 – 2Q, and its total cost function is TC = 40Q + 100, where Q is output and all monetary values are in naira.
Question Parts
(a)
Find the profit‑maximising output and the corresponding price.
(b)
Calculate the profit earned at the output found in part (a).
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Question 7 View Details
The following macro‑economic data for Nigeria in the year 2024 are given (all values are in ₦ billions): - Wages and salaries: 2,800 - Rent: 300 - Interest: 250 - Profits: 1,150 - Indirect taxes less subsidies: 400 - Household consumption expenditure: 3,200 - Gross fixed capital formation (investment): 1,100 - Government expenditure: 800 - Exports: 500 - Imports: 600 - GDP deflator (2023): 110 - GDP deflator (2024): 121 - Population (2023): 220 million - Population (2024): 225 million Using the data above, answer the following questions:
Question Parts
(a)
Compute the Gross Domestic Product (GDP) for 2024 using the income approach.
(b)
Compute GDP for 2024 using the expenditure approach and compare the result with part (a). Explain any difference that may arise.
(c)
The GDP deflator rose from 110 in 2023 to 121 in 2024. (i) Compute the real GDP growth rate for 2024. (ii) Using the population figures, compute the real per‑capita GDP growth rate and comment on what this indicates about living standards.
() Compute the real GDP growth rate for 2024.
() Compute the real per‑capita GDP growth rate and comment on living standards.
(d)
The government plans to increase its expenditure by 15 % financed entirely by borrowing. Assuming a marginal propensity to consume (MPC) of 0.75, estimate the expected change in equilibrium GDP using the expenditure multiplier and discuss the likely impact on unemployment.
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Question 8 View Details
The Central Bank of Nigeria (CBN) has provided the following information for the first quarter of 2024: - Total commercial bank deposits: ₦ 8,000 bn - Required reserve ratio (RRR): 15 % - Cash reserve ratio (CRR): 5 % - Excess reserves held by banks: 2 % of total deposits - The CBN purchases ₦ 200 bn of government securities in the open market. - Velocity of money (V) is estimated at 4. - The price level is assumed to be unchanged. Using the data above, answer the following questions:
Question Parts
(a)
Calculate the theoretical maximum money supply that could be created from the given deposits using the simple money multiplier formula.
(b)
Given that banks keep excess reserves equal to 2 % of total deposits, determine the actual increase in the money supply resulting from the CBN's open‑market purchase of ₦ 200 bn government securities.
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